Update: Thursday afternoon, Uber became the first Transportation Network Company to release information the city of Seattle has sought for months to inform its decision making.

The company revealed that the number of drivers currently signed up with uberX Seattle is 900—the first indication of just how popular the service has become. It also said the number of drivers active on the uberX system at any one time “regularly” exceeds 300, which is double the city’s proposed cap, and is growing to meet demand. Uber also shared previously released details about its insurance coverage and volunteered to meet in person with Seattle City Council members to review its policies.

Uber Seattle’s General Manager Brooke Steger said in a statement that the company was “now releasing these driver numbers to illustrate to the Council that this legislation will kill ridesharing as we know it.”

Update #2: Lyft shortly afterwards released a statement that in Seattle “1000 drivers have gone through the safety approval process to join the Lyft platform,” and Sidecar confirmed Friday that it has “nearly 1000” registered drivers. Those companies declined to clarify how many of those drivers are actively working for the companies and to disclose how many people are typically driving on the system at any one time, which would be more helpful in shaping the current city debate.

The goals of the two proposals were essentially the same: To allow popular smartphone-based dispatch companies that use drivers who pick up passengers in their personal cars to operate legally, but with some limits, during an experimental phase that gives the highly constrained taxi and for-hire industry some time to evolve and innovate.

The prevailing compromise brokered by Council Member Sally Clark is more flexible and doesn’t cap the overall number of drivers that can seek licenses to drive for the TNCs (just how many can be driving for a company at any given time). If those companies decide to stay in Seattle, this would provide more opportunities for single parents, immigrants, substitute teachers, underemployed actors, students, and former taxi drivers to carve out an income working for Lyft, uberX, Sidecar, and whatever other competitors may emerge. The downside is that, unlike the approach championed by Council Member Mike O’Brien that would have capped the overall pool of TNC drivers that companies could choose from, it puts most of the power in the hands of the dispatch companies rather than individual drivers.

But given all the competing interests on this issue, it’s a tortured but reasonable compromise that will allow the city to see how things shake out during a pilot phase and move towards a better, more open system. In last week’s discussion, many council members supported an ultimate goal of removing caps, loosening constraints on the rides-for-hire industry, and letting the growing market for alternatives to car ownership sort itself out. They also discussed revisiting the cap number after getting hard data about the demand for TNC services (numbers that the companies have refused to disclose).

With the city council poised to take a final vote on the legislation this month, it remains to be seen whether the TNCs will be willing to stay in Seattle. They’ve opposed caps on their operations, as well as requirements for TNC drivers to go through the same (hopefully streamlined and more logical) training as taxi and for-hire drivers.

There’s another sleeper issue that could prove equally difficult to resolve—what kind of insurance the TNC companies and their drivers will be required to carry. This has gotten less airtime than the cap question, perhaps because the city council has been far more unified in its stance that existing gaps in TNC insurance coverage need to be fixed.

Alexa Vaughn at the Seattle Times wrote a good overview earlier this week of the uncertainties around TNC insurance coverage—an issue that the city council left largely unresolved until the final vote. But Council Member Clark issued a stern warning last week:

If the insurance can’t be figured out, that’s going to be an issue, and I don’t think the drivers engaged in this get the problem. They don’t get that their personal insurance, almost uniformly, to a policy says, ‘Do not use your car for commercial endeavors.’ That puts them at risk for being dropped, and probably that’s not the worst thing that could happen.

A number of us have been told by the TNC companies that views in the industry are evolving and coverage is going to be there, but until we see things in writing…this will remain a big problem.

In fact, insurance uncertainties were one of the major barriers to peer-to-peer carsharing companies like RelayRides and Getaround—which allow car owners to rent their vehicles out when they’re not using them—getting a toehold in the Northwest. To open the door to those companies and make their business model viable, California, Oregon, and Washington all passed state legislation clarifying that the company’s insurance policy would be liable in the case of an accident while the car is rented out and preventing insurers from canceling someone’s personal insurance simply for participating in peer-to-peer carsharing.

The city of Seattle is also concerned that insurance companies would deny coverage to any TNC driver who gets into an accident if the company realized he or she was picking up passengers in a personal car for money. While the typical TNC $1 million umbrella coverage would cover certain liabilities, it has not always been clear whether it would cover the driver’s car or injuries. And if a TNC driver hits someone without a passenger in the car at the time of the accident, as happened in the death of a 6-year-old San Francisco girl, the insurance questions get murky.

Lyft, at least, has recently expanded its insurance coverage. And they’ve formed a coalition of insurers, regulators and other TNCs to try to resolve some the broader insurance questions. But the companies have declined to publicly share their insurance policies, and city of Seattle officials have not seen details. The TNCs also object to the city’s insistence that their insurance policies kick in any time a driver is “live” on the app, even if the driver is simply driving around waiting for a passenger.

The TNC companies argue that a driver could avoid buying personal insurance simply by turning on the app even when they are driving to the drug store or going out to eat. But it seems like their technology, which the companies claim can do much more complicated things, could be adjusted to detect this kind of abuse.

By contrast, taxi and for-hire companies are required to share their insurance policies with the city, and drivers must buy commercial insurance policies that can cost as much as $10,000 a year. Taxi drivers have complained that city stipulations about who can provide that insurance are so stringent that only a couple of companies qualify, and the council wants to explore if rule changes could foster more competition and lower costs without sacrificing safety.

It is clear that Seattle city council members are nervous about existing TNC insurance gaps, but less clear how they will seek to close them. Last week, O’Brien floated the idea of simply requiring TNC drivers to buy the same commercial insurance coverage as taxi and for-hire drivers—which would radically change the existing cost-benefit equation and make it uneconomical for all but the most serious TNC drivers.

He raised another scenario in which the TNC companies guarantee to cover any insurance shortfalls that arise in an accident and that are the direct result of the driver’s relationship with a TNC, up to state mandated minimums, and to hold the driver and city harmless. As O’Brien put it:

If I go sign up to work for Lyft, and I have some mix of personal insurance and umbrella insurance that they provide and a month later I’m dropping my kid off at school and I get in a fender bender and my insurance says I’m not covered (because I’ve been using my car for commercial purposes at other times), Lyft would have to cover that…I want to put the risk on the TNC dispatch companies, not the drivers.

Comments

Biola Shofu

August 14, 2014 at 7:23 pm

I am a TNC driver and I obtained am leasing a new vehicle through them. On the vehicle reg. they gave me it says: for Commercial/taxi use. I also just secured personal insurance and it is getting to the time that I will have to upload my registration to them.

I am terrified that they will deny me insurance. If they do. I’ll be stuck with no job, weekly lease payments,and a new car I can’t drive. A solution for TNC drivers is urgent.

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